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Definitions and Compositions of Key Global Indicies

Dow Jones
Dow Jones

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

Often referred to as “the Dow”, the DJIA is the oldest and single most watched index in the world. DJIA includes companies like General Electric, Disney, Exxon and Microsoft.

S&P 500
STANDARD & POOR’S 500 INDEX – S&P 500

An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

Companies included in the index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor’s. The S&P 500 is a market value weighted index – each stock’s weight in the index is proportionate to its market value.
The S&P 500 is one of the most commonly used benchmarks for the overall U.S. stock market. The Dow Jones Industrial Average (DJIA) was at one time the most renowned index for U.S. stocks, but because the DJIA contains only 30 companies, most people agree that the S&P 500 is a better representation of the U.S. market. In fact, many consider it to be the definition of the market.

Other popular Standard & Poor’s indexes include the S&P 600, an index of small cap companies with a market capitalizations between $300 million and $2 billion, and the S&P 400, an index of mid cap companies with market capitalizations of $2 billion to $10 billion.

A number of financial products based on the S&P 500 are available to investors. These include index funds and exchange-traded funds.
Click here to view the composition of the S&P 500

NASDAQ
NASDAQ

A computerized system that facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks. Created on February 5, 1971, the NASDAQ Composite Index was the world’s first electronic stock market and began with a base of 100.00.

The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market.

Today the NASDAQ Composite includes over 3,000 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes.

SPI 200
SPI 200 FUTURES CONTRACT

The SPI 200 Futures contract is the benchmark equity index futures contract in Australia, based on the S&P/ASX 200 Index. It provides all the traditional benefits of equity index derivatives. The SPI 200 is ranked in the top 10 equity index contracts in Asia in terms of traded volume.

S&P/ASX 200
S&P/ASX 200

The S&P/ASX 200 index is a market-capitalisation weighted and float-adjusted stock market index of Australian stocks listed on the Australian Securities Exchange from Standard & Poor’s. It was started on 31 March, 2000 with a value of 3133.3, equal to the value of the All Ordinaries at that date.

FTSE
FTSE

A company that specializes in index calculation. Although not part of a stock exchange, co-owners include the London Stock Exchange and the Financial Times.

The FTSE is similar to Standard & Poor’s in the United States. They are best known for the FTSE 100, an index of blue-chip stocks on the London Stock Exchange.

DAX
DAX

A stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of average trading volume.

The DAX was created in 1988 with a base index value of 1,000. DAX member companies represent roughly 75% of the aggregate market cap that trades on the Frankfurt Exchange.

In a different twist from most indexes, the DAX is updated with futures prices for the next day, even after the main stock exchange has closed. Changes are made on regular review dates, but index members can be removed if they no longer rank in the top 45 largest companies, or added if they break the top 25.

The vast majority of all shares on the Frankfurt Exchange now trade on the all-electronic Xetra system, with a near-95% adoption rate for the stocks of the 30 DAX members.

CAC 40
CAC 40

The French stock market index that tracks the 40 largest French stocks based on market capitalization on the Paris Bourse (stock exchange).

The CAC 40 is used as a benchmark index for funds investing in the French stock market and also gives a general idea of the direction of the Paris Bourse.

The CAC 40 is similar to the Dow Jones Industrial Average in that it is the most commonly used index that represents the overall level and direction of the market in France.

Nikkei
Nikkei 225

Short for Japan’s Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the U.S. In fact, it was called the Nikkei Dow Jones Stock Average from 1975 to 1985.

The index has been calculated since Sept 1950 (retroactively since to May 1949). A few years after the country’s leading business newspaper the Nihon Keizai Shimbun (Nikkei or Japan Economic Daily) began to commission the calculations, it was renamed.

Hang Seng Index - HIS
Hang Seng Index

A market capitalization-weighted index of 40 of the largest companies that trade on the Hong Kong Exchange. The Hang Seng Index is maintained by a subsidiary of Hang Seng Bank, and has been published since 1969. The index aims to capture the leadership of the Hong Kong exchange, and covers approximately 65% of its total market capitalization. The Hang Seng members are also classified into one of four sub-indexes based on the main lines of business including commerce and industry, finance, utilities and properties.

The Hang Seng is the most widely quoted barometer for the Hong Kong economy. Because of Hong Kong’s status as a special administrative region of China, there are close ties between the two economies and many Chinese companies listed on the Hong Kong Exchange.

Singapore Exchange - SGX
Singapore Exchange

Asia-Pacific’s first publicly traded exchange that was inaugurated on December 1, 1999. The SGX is the marketplace for many of Singapore’s leading companies and is one of the primary markets for equities and various derivatives in south-east Asia.

The SGX was created through the merger of the Stock Exchange of Singapore and the Singapore International Monetary Exchanges. SGX is listed on its own exchange and is a key component of several major benchmark indexes.

Shanghai Stock Exchange
Shanghai Stock Exchange

The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities Regulatory Commission (CSRC). Stocks, funds and bonds are all traded on the exchange, which has listing requirements including that a company must be in business and be earning a profit for at least three years before joining the exchange.

Two main classes of stock for every listed company are traded on the exchange: A-shares and B-shares. B-shares are quoted in U.S. dollars, and are generally open to foreign investment. A-shares are quoted in Yuan, and are only available to foreign investment through a qualified program known as QFII.

The largest stock exchange for Chinese equities is actually the Hong Kong Exchange, which has been trading H-shares in Chinese companies for many years; these equities have also been open to foreign investment. Most of the total market cap of the Shanghai Stock Exchange is made up of formerly state-run companies like major commercial banks and insurance companies. Many of these companies have only been trading on the exchange since 2001.